Foreign ministers of the Gulf Co-operation Council arrive in Riyadh, Saudi Arabia, on December 9, 2019 for the bloc’s annual gathering. The next summit will take place on January 5, 2021 / SPA
Foreign ministers of the Gulf Co-operation Council arrive in Riyadh, Saudi Arabia, on December 9, 2019 for the bloc’s annual gathering. The next summit will take place on January 5, 2021 / SPA
Foreign ministers of the Gulf Co-operation Council arrive in Riyadh, Saudi Arabia, on December 9, 2019 for the bloc’s annual gathering. The next summit will take place on January 5, 2021 / SPA
Foreign ministers of the Gulf Co-operation Council arrive in Riyadh, Saudi Arabia, on December 9, 2019 for the bloc’s annual gathering. The next summit will take place on January 5, 2021 / SPA

Gulf foreign ministers hold online meeting before GCC summit


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Gulf Arab foreign ministers held an online meeting on Sunday, hosted by Bahrain, before the annual Gulf Co-operation Council summit.

The summit, on January 5, will discuss steps towards ending the diplomatic and economic boycott of Qatar, which began in 2017.

Discussions focused on economic, social and environmental topics as well as “other areas of co-operation between member states”, Oman News Agency said.

Saudi Arabia, the United Arab Emirates and Bahrain severed diplomatic ties with Qatar, which the GCC states and Egypt accused of supporting extremist groups and interfering in its neighbours’ internal affairs.

Saudi Arabia has pushed for a resolution of the dispute, and Bahrain said in a statement at the foreign ministers’ online meeting that this would prepare the ground for the summit next week.

Dr Anwar Gargash, the UAE’s Minister of State for Foreign Affairs, expressed hope of reconciliation, standing behind Saudi Arabia’s efforts.

“From Riyadh, the capital city of the Gulf’s decision-making, we, God willing, are taking steps to enhance the intra-Gulf dialogue towards the future,” he wrote on Twitter this month.

Reuters' sources said they expect an agreement to be reached by the summit, which could result in a set of principles for negotiations, or a more concrete move involving reopening airspace to Qatar.

But Qatar has told Kuwait and the US, the two mediators in the dispute, that any resolution should be based on mutual respect of foreign policy, among other matters.

Doha had been given 13 demands, including the closure of Al Jazeera television and a Turkish military base, cutting links to the Muslim Brotherhood and cooling ties with Tehran.

Saudi Arabian Foreign Minister Prince Faisal bin Farhan Al Saud said this month that a resolution to the dispute with Qatar seemed within reach after Kuwait announced progress towards ending the row.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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